Personal Loan in India – The Life And Times of P2P Lending

Let’s face it friends. For years, one of India’s biggest limitation within its traditional banking gamut has been its outdated approach towards lending. The eligibility criteria include a look at the applicant’s CIBIL scores for lending decisions. This excludes the population who are new-to-credit.

This is where alternative lending products such as Digital Lending and Peer-to-peer (P2P) Lending both got a look-in. Both provided a technology and data driven solution to consumers looking for fresh and first-time credit.

India’s complex regulations have weighed down the banking industry. Making it complex are the multi-level infrastructures, policies and regulations. The retail lending segment has been affected by the widening gap between credit demand and credit supply. This in-turn increases the volume of non-performing assets.

P2P Lending in India

It was in 2012 that P2P lending first made its way into India. By 2016, RBI (Reserve Bank of India) had already inclined towards making this emerging industry as mainstream. As per the consultation paper released in April 2016, the RBI submitted a skeletal P2P lending framework. Post that, formal regulatory guidelines were released by October 2017. Various P2P lending based platforms were inducted into the NBFC (non-banking financial corporation) segment.

As of April 2016, close to 30 startup P2P lending companies operated in India. Its potential benefits have allured to stakeholders. The stakeholders involved are agencies, lenders and borrowers. Despite its benefits, RBI has implored to keep an eye out for the risks involved in P2P lending. The global cumulative lending via P2P platforms by 2015 was calculated at 4.4 billion GBP. This has grown from 2.2 million GBP in 2012.

As of now P2P lending is fully or partially regulated in countries such as Germany, USA, Italy, France, New Zealand, United Kingdom, Canada, Argentina and Australia. China possesses the highest P2P market in the world with a number of platforms providing diverse services.

P2P lending can be likened to debt financing. It’s high level of efficiency, speed and transparency make the lending process a breeze. Usually, P2P lending platforms act as intermediaries between a lender and a borrower. An online interface connects the three. Digital lending however, is operationally the same as P2P lending, except that in P2P lending, a lender invests his/her money, which a borrower avails as a loan.

Digital Lending in India

Digital lending is a lending solution which enables salaried individuals to apply for a personal loan with quick loan approval and fast disbursement; leveraging technology and data. Through traditional lending, banks rely on dossiers of paperwork; neither do they provide any clarity on approval status and documentation delays. It is a herculean task to get funds in times of an emergency. On a digital lending platform, however, eligible individuals are provided funds based on their creditworthiness.

A digital lending platform combines the technology with credit lending principles. Borrower profiles are evaluated by credit underwriting algorithms to assess his/her creditworthiness based on multiple factors. The borrower then pays EMIs which the digital lending platform keeps track of. Borrowers can apply for a personal loan towards a number of purposes such as health, second hand car, festival spending, travel, marriage, home improvement, etc.

Digital lending is growing rapidly and recent reports indicate that India is the third largest alternate lending sector in the world – after USA and China. Digital lending, although existent in India for close to a decade now, is an online process of lending money to salaried individuals; done mostly via an app or a website.

A digital lending platform, such as Loan Singh, relies exclusively on technology to perform all the processes in a loan lifecycle. Digital lending provides a superb opportunity for underserved & credit starved salaried individuals to apply for online personal loans. You might worry as to how much reliable can a digital lending platform be, with your personal and salary information being fed into the system. Loan Singh exercises precaution when dealing with your sensitive data by adding a secure socket layer (SSL) which establishes an encrypted link between the platform and your browser, ensuring the data that passes through remains private.

Features of Digital Lending

The ‘Digital India’ project swooped in at the right time to provide a lift to digital lending in India. With the combination of borrower data, algorithms and technology, the question arose as to what could be done with this trident to actually solve daily financial problems that was affecting India’s finance sector. Financial services are the largest contributor to the GDP. The idea is to have a simple platform that provides quick yet effective financial services. There are more and more millennials ready to accept a digital platform to solve their financial problems. The need for digital lending arises mainly due to the shortcomings in traditional lending solutions. Some factors that govern its rise are:

Technology

Making use of technology certainly puts a digital lending platform in the driver’s seat. For loan processing, there is a system required to check the documents, process the loan and disburse the approved loan amount. All these are done with the help of credit models that make use of borrower data. Digital lending allows for continuous upgrade of tools that are needed to make the loan experience faster and better.

Online

Imagine not needing to travel from bank-to-bank with documents, photocopies and application forms. With digital lending, the documents can be retrieved from the borrower’s internet banking account or uploaded from the computer. The borrower’s credit report is fetched online, and helps a digital lending platform to provide collateral free personal loans. So, without actually seeing the borrower, the loan is approved and disbursed.

There is least human intervention involved in digital lending. There are no executives to physically accept your application form or your physical documents. Therefore, there is no chance of partial tampering of documents or unbiased loan decisions via the route of digital lending. Digital lending also shortens the credit assessment time.

Application

The use of a simple online application form, replaces the pile of exhaustive paperwork that could take-up an hour to fill; along with references and signatures.

Disbursement

With traditional lending solutions taking up to 2-3 days to get the loan from approved to disbursal stage, a digital lending platform will do the same within 36 hours; if all the eligibility criteria are met.

Lending money is an activity that involves handling of sensitive borrower information – including the financials. This makes it paramount to protect the data. There are occurrences reported of identity theft and website hacks that make us skeptical to depend solely on digital lending. But, the hallmark of a good digital lending platform is making use of SSL layers for encryption.

Benefits of Loan Singh

Loan Singh presents a number of advantages over other online platforms. Some of these advantages are

Loan Singh is a digital lending platform that prides in providing online personal finance loan or unsecured personal loan to salaried individuals. You can apply for quick funds as an easy emergency loan which is not a bank loan. We provide a loan with the best personal loan interest rates. The instant funds, or instant loans, are loans between Rs. 50,000 and Rs.10,00,000 taken for purposes such as: